Economics of Cotton

A National Cotton Council analysis affirms that today’s modern cotton production system provides significant benefits to rural America’s economy and environment.

Healthy rural economies are based on stable farm income, and cotton yields and prices are often among the healthiest of all field crops, vegetable or fruit.

Cotton continues to be the basic resource for thousands of useful products manufactured in the U.S. and undefinedoverseas. U.S. textile manufacturers use an annual average of 7.6 million bales of cotton. A bale is about 500 pounds of cotton. More than half of this quantity (57%) goes into apparel, 36% into home furnishings and 7% into industrial products. If all the cotton produced annually in the U.S. were used in making a single product, such as blue jeans or men’s dress shirts, it would make more than 3 billion pairs of jeans and more than 13 billion men’s dress shirts.

An often-overlooked component of the crop is the vast amount of cottonseed that is produced along with the fiber. Annual cottonseed production is about 6.5 billion tons, of which about two-thirds is fed whole to livestock. The remaining seed is crushed, producing a high-grade salad oil and a high protein meal for livestock, dairy and poultry feed. More than 154 million gallons of cottonseed oil are used for food products ranging from margarine and cooking oils to salad dressing.

The average U.S. crop moving from the field through cotton gins, warehouses, oilseed mills and textile mills to the consumer, accounts for more than $35 billion in products and services. This injection of spending is a vital element in the health of rural economies in the 17 major cotton-producing states from Virginia to California.

The gross dollar value of cotton and its extensive system of production, harvesting and ginning provides countless jobs for mechanics, distributors of farm machinery, consultants, crop processors and people in other support services. Other allied industries such as banking, transportation, warehousing and merchandising also benefit from a viable U.S. cotton production system.

Production, Harvesting and Ginning

Annual business revenue stimulated by cotton in the U.S. economy exceeds $120 billion, making cotton America’s number one value-added crop.

The farm value of U.S. cotton and cottonseed production is approximately $5 billion.

Overseas sales of U.S. cotton make a significant contribution to the reduction in the U.S. trade deficit. Annual values of U.S. cotton sold overseas have averaged more than $2 billion. Recently, the U.S. has supplied over 10.5 million bales of the world’s cotton exports, accounting for about 37% of the total world export market. The largest customers for U.S. cotton are Asia and Mexico.

Exports of yarn, denim and other U.S.-manufactured cotton products have increased dramatically since the early 1990s, from 1.38 million bale equivalents in 1990, to more than 4 million bale equivalents in 1998.